Armata Pharmaceuticals, Inc. (ARMP) 2007 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Targeted Genetics third-quarter 2007 financial results conference call. Today's presenters are Stewart Parker, President and CEO of Targeted Genetics and David Poston, Targeted Genetics Chief Financial Officer. Ms. Parker will open today's call with the business and clinical highlights for the quarter, and her comments will be followed by the financial update from Mr. Poston. The call will be open for a question-and-answer session. At this time all participants are in a listen only mode. Following today's presentation instructions will be given for the question-and-answer session. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded this Wednesday morning, October 31, 2007. I would now like to turn the conference over to Stewart Parker. Please go ahead, ma'am.

Thanks, Matt. Good morning, everyone, and thank you very much for joining us. Before we begin I would like to remind you that doing the course of this call we may make projections and other forward-looking statements regarding future events or future financial performance of the Company. We do wish to caution you that such statements are only predictions, and actual events or results may differ materially from the statements we make. So please see our documents that we file from time to time with the SEC for information about risks that may affect the Company, including our most recent form 10-K for 2006 already on file, and our form 10-Q for the third quarter of '07, which will be filed today.

So during this morning's call I will review the clinical and business highlights of the third quarter, and I will start by outlining the status of our tgAAC94 trial for inflammatory arthritis, first noting that Dr. Philip Mease, the principal investigator for the study, will be presenting additional data from this program at the American College of Rheumatology meeting in Boston on November 10th.

Now on September 17th this year the Recombinant DNA Advisory Committee of the National Institutes of Health or the RAC, conducted a public hearing to review the details of a death of a patient participating in our Phase I, II trial of tgAAC94 for inflammatory arthritis. Evidence presented at the hearing suggested that the subject died of disseminated histoplasmosis, an invasive fungal infection. The medications the subject was on as a normal course of her clinical care are known to be a risk factor for histoplasma infection.

Moreover, initial molecular tests showed there was no amplification of vector and only trace amounts of vector DNA in tissues outside the joint. Consequently, we believe these data suggested it is highly unlikely that tgAAC94 contributed to the conditions that caused the death. Further molecular testing has now been completed and continues to support the premise that tgAAC94 did not contribute to this patient's death. The specifics of this data will be reported at the ACR meeting on November 10th.

Meanwhile we continue to work with the FDA, the RAC and other involved parties to complete the investigation, and we plan to provide an update on the status of this trial prior to year end. Now in preparation for getting off clinical hold and restarting the trial, we have amended the informed consent documentation to include information on this SAE. We will also need to obtain IRB and clinical site reviews and approvals, and then we consent the approximately 35 subjects still scheduled to receive a second administration of drugs.

We've also been working with our rheumatology advisory board to develop concepts for future clinical trials of tgAAC94. We and they continue to believe that a localized long-lasting anti-TNF therapeutic has significant potential to address needs not currently met by systemically deliberate anti-TNF therapies.

Now despite the fact that addressing the issues surrounding this tragic SAE have taken significant amounts of time and management attention, we're very pleased that we've been able to continue moving our other programs ahead, as well as to analyze opportunities for additional programs. So let me move now to the rest of our pipeline. In the third quarter we presented interim data from a Phase II trial evaluating tgAAC09 as an HIV vaccine candidate; the data was presented at the 2007 AIDS vaccine conference. The study results demonstrated that tgAAC09 appears safe and well-tolerated. These results are very consistent with previous clinical experience with tgAAC09. Modest immune responses were detected in some recipients who received higher doses of drug.

This Phase II trial was conducted in Africa to evaluate the potential impact of a higher dose of tgAAC09 and boost vaccination on the strength and duration of immune responses. Our future development plans for this program include the evaluation of vaccine candidates containing several additional HIV genes, either alone or in a prime-boost strategy.

Our collaborative partner, Celladon, continued to enroll patients in their Phase I, II clinical trial of Mydicar, a potentially groundbreaking therapy for the treatment of congestive heart failure. We expect initial clinical data from this program to be reported in the first half of 2008. Pre clinical studies for our Huntington's disease expressed RNAi product continue in concert with our academic collaborators and our corporate collaborator, Sirna Merck. Before clinical studies can proceed long-term animal studies must be conducted using the AAV RNAi construct that is thought to be optimal for shutting off expression of this mutant gene. Those studies in mice are ongoing and will be followed by studies in larger animals.

Finally, we've received issuances of additional patents related to our AAV technology platform, which continues to expand the potential applications of AAV based gene delivery. At this point I will turn the call over to David Poston, our Chief Financial Officer, who will review financial results for the third quarter and provide guidance for the remainder of the year. David.

Thanks, Stewart, and thanks to everyone for joining in this morning. This morning we reported financial results for the third quarter and nine months ended September 30, 2007. We reported third quarter revenue of $2.4 million compared to $2 million for the same quarter in 2006. And we reported revenue of $7.1 million for the nine months ended September 30, 2007 compared to $5.9 million for the same period last year.

The drivers for the increases in both periods were higher revenue from our HIV AIDS vaccine development work under the NIAID funded subcontract with Children's Hospital of Philadelphia and the Research Institute at Nationwide Children's Hospital and also from higher licensing revenue generated from a milestone payment.

Research and development expenses were $3.9 million for the third quarter of 2007, up from $3.1 million in the third quarter of 2006 and increased to $12.8 million for the nine months ended September 30, 2007 from $10.5 million for the same period in 2006. The drivers for this year's higher R&D expenses are higher clinical costs for our inflammatory arthritis trial, higher activity in support of the NIAID funded HIV AIDS vaccine project, and our continued efforts in support of our congestive heart failure collaboration which is currently in Phase I clinical trials.

Our general and administrative expenses at $1.7 million were flat for the third quarter of 2007 when compared to 2006. G&A was also essentially flat for the nine months ended September 30, 2007 at $4.8 million compared to $4.7 million for the same period last year. Our net loss for the third quarter of 2007 was $3 million or $0.15 per share compared to a net loss of $3.2 million or $0.32 per share for the third quarter of 2006. For the nine months ended September 30, 2007 we reported a net loss of $11.1 million or $0.72 per share compared to a net loss of $34.8 million or $3.64 per share for the same period in 2006.

Our net loss from last year's nine-month period included a $23.7 million goodwill impairment charge, and our per share results for 2007 reflect the issuance of 2.18 million shares in January of 2007 and 6.7 million shares in June 2007.

Before reviewing our cash position and guidance for the rest of the year, I would like to provide some color around that milestone payment that we received in the third quarter. The milestone payment was from Amsterdam Molecular Therapeutics or AMT, upon the initiation of a preregistration clinical trial in Canada for AMT-011, an AAV1 based therapy for lipoprotein lipase or LPL deficiency.

LPL deficiency in humans is a severe and debilitating disease associated with extremely high serum triglyceride concentrations, high morbidity and increased mortality. The payment was made under a licensing agreement that provides AMT with non-exclusive rights to patents covering adeno-associated virus type 1, a serotype of AAV with potential application in the development and commercialization of therapeutic products for the treatment of LPL deficiency. AMT anticipates commercial rollout of AMT-011 in 2009. This licensing agreement demonstrates the value of our AAV intellectual property, and we are pleased with AMT's progress so far and the revenue this agreement is generating.

Finally, I would like to discuss our cash position and guidance for the rest of the year. As of the end of the third quarter of 2007 we are on track with our full year revenue forecast of up to $10 million. And our guidance for our estimated 2007 burn rate is in the range of 14 to $16 million. Our cash and cash equivalents were on plan at $20.5 million at September 30, 2007 as compared to $6.2 million at December 31, 2006.

We believe that these cash balances combined with anticipated funding from our product development collaborations and contracts will be sufficient to fund our currently forecasted operations for at least a year. We continued to closely monitor our financial position during this time. We are focusing our financial attention on carefully stewarding the funds we raised earlier this year and on extending our cash horizon.

At this point I will turn the call back over to Stewart who will highlight some of our program plans moving through the rest of the year.

Thanks, David. So our primary goal right now really is to continue working with the FDA to identify a path to restart the Phase I, II trial of tgAAC94. And we anticipate that we will be able to provide an update on the trial before year end. In the meantime, we are actively working on the design of a next phase of clinical development in that program, and we are also working to advance the rest of the pipeline. We continue research and evaluation of AAV based AIDS vaccine candidates for use against strains of HIV that are prevalent in both developing and non developed nations.

We hope to enter the clinic with a multicomponent AAV1 based vaccine against HIV in 2008. We will continue to push ahead our partner programs in congestive heart failure and Huntington's disease. Each of these programs is exploring wholly new approaches to treating diseases that are really underserved by current treatment. The presentation of clinical data from the Phase I, II trial of Mydicar and the pre clinical data from our Huntington's disease program should provide additional insight into the potential of those innovative therapeutic candidates.

In addition to their inherent product opportunities, each of these collaborations validates the broad utility of AAV vectors in a variety of disease indications. We anticipate that continued progress in the current partner programs could certainly create additional collaborative opportunities with other leading edge biotechnology and pharmaceutical companies. We will obviously maintain a critical eye on spending, investing in those programs that have the greatest near-term potential while managing our financial resources so as to extend our cash horizon.

So we look forward to updating you all in the coming weeks and again thank you all for your continued support of the work that we feel is very important to advance the treatment of serious diseases. So at this point we will give you an opportunity to ask questions.

(OPERATOR INSTRUCTIONS) Ladies and gentlemen, it looks like we have no questions at this time.

Okay, listen, thanks again for joining us. And we look forward to speaking with you in the coming weeks. We will have the update on the tgAAC94 program at ACR November 10th.

Thank you, ma'am. Ladies and gentlemen thank you for your participation in today's teleconference with Targeted Genetics. The presentation will be archived and you will be able to access at www.TargetedGenetics.com. Thank you again for joining the presentation today. Have a good day.